HPE Names Engineer to Succeed CEO Whitman

　　After six years restructuring the storied Hewlett Packard Co., Meg Whitman will step down in February as chief executive of Hewlett Packard Enterprise. HPE named computer engineer and 22-year HP veteran Antonio Neri as its next CEO, suggesting technology changes may play a bigger role in its future than financial ones.

　　The move was announced as HPE reported quarterly earnings with strong revenue growth, but profits still lagging due to high memory prices and the ongoing commoditization of servers. Neri will continue a restructuring effort announced last month, HPE Next, that aims to shed in 2018 another $250 million in costs at the server and comms infrastructure giant.

　　Wall Street analysts called the move a surprise given the on-going restructuring and Whitman’s decision earlier this year not to seek a CEO role at Uber. However, HPE insiders said Whitman was expected to leave soon and name Neri her successor.

　　Many employees assumed Neri would become the new CEO after he was promoted to president earlier this year, said one veteran engineer who asked to remain anonymous. Few expressed surprise at Whitman’s planned departure given that she is 61 and HP’s founders had a tradition of senior executives retiring near age 60 “to provide an upward path for younger talent and to periodically reinvigorate executive leadership,” he said.

　　“Antonio is ready to take the reins and go the distance,” Whitman said on a quarterly earnings call with analysts Tuesday.

　　“We have a much smaller more nimble and focused company. We have a good leadership bench, and Antonio is a deep technologist. The next CEO of this company needs to be a deeper technologist,” she said.

　　Neri is expected to shift gears and aggressively develop technology in-house, rather than focus on mergers, according to two analysts quoted in a Reuters report. Neri began his career at HP as a customer service engineer in the EMEA call center and rose to lead the company’s server division in 2015.

　　Under Whitman, HP announced in October 2014 it would split into the server-based HPE and HP Inc, a PC and printer company. She then spun out $20 billion worth of HPE’s enterprise services and software operations as well as many smaller units and struck a joint venture for operations in China.

　　Whitman also bought many small and medium-sized companies that expand HPE’s presence in growth areas in cloud software, all-flash arrays and edge networking. “I have added a lot in shareholder value, financial restructuring and reigniting our innovation engine,” Whitman said, noting her support for the company’s research on The Machine, a new memory-centric, big-data server architecture.

　　When she arrived in 2011, HP “was way too broad, we were not executing with the right R&D against any of our segments” and the corporation moved too slowly, said Whitman, who will remain on the HPE board.

　　The former CEO of eBay said she will not return to politics after her unsuccessful race for the governor seat in California in 2010. She also spoke frankly about the reality today for female executives.

　　"I think in the last couple of decades, we made a lot of progress in the number of CEOs and number of female executives in the C-suite. It has stalled out in the last decade, if you look at the data, and I think that's concerning," she said in an interview with CNBC.

　　Whitman joined HP as CEO in 2011 after a gut-wrenching period of controversies under three prior chief executives. By contrast, her tenure marked a time of less sensationalism but still great change with on-going reorgs that split the giant company and laid off an estimated 50,000 people.

　　Some insiders feel overall Whitman, “has done a superior job compared to the prior two CEOs,” said the unnamed HPE senior engineer.

　　The prior CEO [Leo Apotheker] was a complete disaster, and the one prior to that [Mark Hurd] butchered R&D funding so much that is caused significant long-term damage. During Whitman’s time…product development is more focused, and the company structure has been simplified, which should be beneficial to execution and customers alike,” he added.

　　HPE still faces difficulties that stem from the ongoing commoditization of servers. Increasingly servers are purchased at cut-rate prices from design and assembly companies, mainly in Taiwan, by Web giants such as Amazon that operate massive public cloud services.

　　This year’s spike in memory prices nagged HPE’s efforts to grow profits. But Whitman suggested DRAM and flash supplies are improving.

　　DRAM prices rose another 5-10 percent in the past quarter, she said. But “DRAM pricing appears to be leveling out, and the supply is increasing from key vendors…we’re not counting on a drop in DRAM prices next year nor do we expect another 15-20 percent increase,” she said on the conference call.

　　NAND flash had supply constraints early in the year, but they are minimal now with more limited price increases, HPE reported.